Hong Kong: Moving On?

I was just reading this article from the Economist, and I am beginning to have a sense of what Hong Kong’s endgame would be. This is the article: “China is not just shackling Hong Kong, it is remaking it.”

It would continue to be the meeting place for China and the world when it comes to finance. While socially, a China-guided legislative process might aim to create a more equally-distributed Hong Kong, where housing and other issues might become less pressing. China might eventually want to, as the article mentions, “dilute the influence of the property tycoons.” Over time, China will earn points from the Hong Kong public — if it becomes truly effective.

Just 7000 Hong Kongers emigrated to the UK under the BN(O) scheme thus far. This ‘exodus’ is just a trickle, not the wave that Hong Kongers have feared. I suppose this means that most Hong Kongers would like to move on from the political tensions, and return to pragmatic things — how to earn a living and thrive with the rest of China next door.

Some excerpts of interest:

Talk to Chinese officials and state-backed scholars, as well as to pro-government politicians in Hong Kong, and they will insist that neutralising the opposition is a necessary step towards a greater goal: repairing flaws that render Hong Kong’s political and economic systems structurally unsound through a wholesale remodelling of its institutions and society. What is more, they are sure that Hong Kong’s role as an international financial centre will generate such profits that Western financial institutions will rush to invest, rendering the grumbling of foreign governments irrelevant.

I think the paragraph above has turned out to be true. Many Western finance institutions will still want to be in Hong Kong, if only to have some business from greater finance liberalisation in China. Also, the possible reforms in pensions in China will mean that Hong Kong will continue to be a good base for operations. I think as usual, finance capitalism will have an outsized-voice in European and American governments will handle China.

At the same time as the election law changes were being passed in Beijing, the central authorities sent what was widely seen as a warning along these lines in the form of a Hong Kong newspaper op-ed by Tian Feilong, a Beijing-based law professor and member of a government-backed think-tank, the Chinese Association of Hong Kong and Macau Studies. Mr Tian wrote that national leaders do not want to see rubber-stamp loyalists running the city.

This is… very interesting. China doesn’t want rubber-stamping??? Hard to believe. Will just have to see if this will indeed bear out. I can’t imagine there being political opposition in Hong Kong that will take opposing positions when it comes to China-originated legislation. It still remains to be seen what kind of political opposition that China will accept. What kind of equilibrium might that be? Wasn’t the idea that, China fears political vibrancy because of how that model might influence the rest of China? What if Hong Kong’s model of political vibrancy influences the rest of China?

Patriots should love their country, says Mr Tian, but only need to respect the Communist Party. The professor insists that moderate democrats, “once they have adjusted” to the new rules, are welcome to seek election to “supervise and criticise” the government as a form of loyal opposition.

But what does “respect” mean?

Regina Ip, a law-and-order conservative and pro-establishment member of Legco, talks of Hong Kong becoming an “epistocracy”, the technical term for a society governed by experts and the highly educated. At the same time, she admits, the anger and discontent seen during the protests in 2019 “has gone underground, it has not gone away”. She calls for patriotic education but also social-welfare policies to generate housing and jobs for the young. “We must have more redistribution,” she says.

This goes back to the previous point about how current legislative changes could lead to a new political equilibrium that talks about — not just political autonomy, but an effective governance system that addresses real problems in Hong Kong. But will it be done?

The article leaves us with this bitter pill to swallow.

Western governments are not going to deter the demolition. The old Hong Kong is gone. Judge Mr Xi’s China by what it builds in its place.

A lot of this will depend on political flexibility on the part of the Chinese Communist Party. As for the people of Hong Kong, I suppose it will also be time to move on for them.

So a mini-scenarios exercise on HK’s futures using the Jim Dator archetypes:

I don’t think Hong Kong will be allowed to fail — it still remains an important place in the overall strategy for China’s financial governance and in interacting the world. The CCP will continue to have internal red-lines, however, and will actively quash out opposition to its position in HK.

I suppose the “discipline” scenario — in the Jim Dator archetype will continue to dominate. Control in the political-economy system, loosen the grip of local tycoons, and solve social problems and create an actively pro-China constituency in Hong Kong that will over time, become the majority of the population.

The transformative route — of a more open, global Hong Kong, is closed off for now. The CCP reigns supreme. The fate of Hong Kong is now tied up with CCP’s finance regulations.

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Looking at the structures behind the trends

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